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Last checked : 15/10/2018

Charging and deducting VAT

UK decision to invoke Article 50 of the TEU: More information

As of 30 March 2019, all EU law will cease to apply to the UK, unless a ratified withdrawal agreement establishes another date, or the European Council and the UK decide unanimously to extend the two-year negotiation period. For more information about the legal repercussions for businesses:

Charging VAT

When VAT is charged on goods or services the term 'taxable supplies' may be used.

If you are in business and you supply goods or services, you normally have to:

Money does not actually have to change hands for VAT to be due — you may also have to charge VAT (usually on market value) on goods and services that:

  • you exchange for other goods or services;
  • you give away for free;
  • you acquire for your own private consumption.

Deducting VAT

If you are in business, you can usually deduct the VAT you have paid on your own business purchases from the VAT you charge your customers; you then only need to pay the difference to the tax authorities, and report these amounts to them in your periodic VAT return.

Sometimes, the VAT your business has paid exceeds the VAT you have charged to your customers. If so, the tax authorities should reimburse or credit you with the difference.

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* Information not yet provided by national authorities

VAT on invoices

Normally, if you are registered for VAT and you make sales to other businesses, you must issue a VAT invoice — either in paper or electronic form. VAT is normally added to the price of the goods or services on your invoice.

Your VAT identification number must be shown on all invoices you give to customers, as well as the amount of VAT being charged and other standard items.

Exceptions

There are some exceptions to this rule.

For example, if you provide a service to another business, that is not located in the same EU country as your company is based, the VAT will not appear on your invoice. This does not mean the service is not subject to VAT, just that the VAT would be accounted for and paid directly by your business partner in the other EU country.

Similarly, if you make an export of goods to a non-EU country, your invoice will not show VAT. Normally, the buyer in the non-EU country will be subject to importation rules of its country.

Related topics

EU legislation

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Local business support - Do you have questions on operating a business cross-border, for example exporting or expanding to another EU country? If so, the Enterprise Europe Network can give you free advice.

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